Broadband in Wales

Albert Owen Excerpts

Wednesday 6th July 2016 Westminster Hall

[Albert Owen (Ynys Môn) (Lab)]

It is always a pleasure to serve under your chairmanship, Mr McCabe. I congratulate the hon. Member for Ceredigion (Mr Williams) on securing the debate, and I once again welcome the Minister, who has become an expert on rural Wales over the years from the broadband debates he has attended. I am sure that as all Members are doing, he will please the House by wishing the Welsh football team all the very best today. They are not just carrying the red dragon for Wales but carrying the flag for the whole of the British Isles.

I will not give the Minister a hard time, because he has moved towards many things that, when we used to argue about them, he said could never happen. I will not give a spin on that this time; instead, I will start by giving the Welsh dimension, which is what we are talking about. We had a timely meeting with BT today at which we were updated on many of its schemes. I will come on to how that links into the universal service obligation, because it is important that the gaps are plugged properly and that there is a co-ordinated plan. Although the Bill was published only yesterday, I will ask the Minister some questions about how the roll-out will be carried out.

In my north-west Wales constituency, 73% of properties have been connected through a scheme that, as the hon. Member for Ceredigion said, was funded by the Welsh Government, the United Kingdom Government and the European Union. As someone who believed, and still believes, in that partnership and has argued that the interests of Wales will be best served as part of both the United Kingdom and the European Union—[Interruption.] I see the Scottish National party representative nodding his head.

[Calum Kerr (Berwickshire, Roxburgh and Selkirk) (SNP)]

Only about the second bit.

[Albert Owen]

I think I had a false sense of security there. But seriously, that money was targeted and redistributed by the European Union to the areas of greatest need, and we in Wales, particularly rural Wales, were some of the main beneficiaries of that money. It was identified at Brussels level that that funding was needed in certain areas that met the criteria set out, and it helped the scheme to be rolled out as effectively in Wales as anywhere in the United Kingdom. That is down to the partnership between, and moneys from, different levels of government.

Some 73% of properties in Wales have been covered by the roll-out of a 30 megabits per second superfast broadband initiative, and 76% of Anglesey has been covered by the scheme. The average speeds are in excess of those in some other parts of Wales, so there is a good news story there. However, as with all good news stories, there are people who are not benefiting. The date for 95% roll-out has slipped from July 2016 to 2017. To be fair, there have been negotiations under the contract between the Government and BT Openreach, leading to the Access Broadband Cymru scheme providing grants of up to £800, which have helped individuals get fibre to their hard-to-reach homes directly. That is good news, but we need to see that happening more quickly.

As the hon. Member for Ceredigion said, many of the areas in the last 5% are rural areas that rely on tourism. They are beautiful areas, and people want to locate there. I will give an example—I am sure the Minister will be interested in this. I travelled on a train a couple of years ago, and a businessman who lived in Rhoscolyn on Anglesey told me that he worked in three places: in Canary Wharf, here in London; in Hawaii; and in Rhoscolyn. If he had a choice and the broadband speed was there, he would stay in Rhoscolyn to do his work. Unfortunately, he has to go to Hawaii and suffer out there or come here to London to work. There is a serious point there: in many cases people want to locate their business in the area in which they live, which helps the local economy. We need to have a level playing field when it comes to digital technology.

[Chris Davies]

It is interesting to hear that the hon. Gentleman is a great fan of the link between the Welsh Government, the British Government and the European Union, because the two of us were at the meeting earlier with BT at which it clearly stated that rural Wales is behind in dishing out and receiving broadband. It was told by Europe that there needed to be a lot of chimney pots to allow it to tick the boxes and “draw the money down” from Europe—that was its phrase. It is because of our connection with Europe that rural Wales is behind. I hope the Minister will now ensure that we go forward quickly and catch up from the mistakes made in the last few years.

[Albert Owen]

The hon. Gentleman and I were on different sides of the debate—I was a strong remainer and he was not—and I think he has misunderstood what BT said. It said that the Welsh Government wanted greater coverage in the contract, and that was the reason for the slow-up. Coverage was needed, so BT needed to get to as many properties as possible in urban areas. That was why the rural areas were left behind. Even with his anti-European ways, he is stretching it a little bit to blame the EU on this occasion. I am quite happy to lay blame, and on this occasion it lay with the contract between BT and the Welsh Government.

BT would have liked to roll the scheme out across the whole country. It advertised it by telling many people in rural areas of Wales that broadband would be rolled out to them by 2015 and 2016, but for a commercial reason that has not happened. They have been left at the back of the queue, and I do not think that is fair, because rural areas are already suffering in many ways. I keep saying, because it is true, that the areas where there are poor broadband services and speeds are those where there is poor mobile signal as well. In London, if someone cannot get broadband or is without it for a few days or weeks, they can rely on 4G. In many rural areas in Wales that is not possible. We want to get BT linked up with EE, and I know the Minister has been involved in that. There is the possibility of homes getting a TV, landline and mobile phone package, and such packages will improve in the future.

The issue I most want to raise with the Minister is the new Digital Economy Bill. I very much welcome it, as I did when I spoke in the Queen’s Speech debate. In many arguments with me, the Minister used to say that a slow-speed universal obligation was a ridiculous idea and would not be needed, and that the Government were going for top-speed. All of a sudden that is now the Prime Minister’s flagship policy, and to secure his legacy in history we are at last going to have a universal service obligation. Because he is a professional, the Minister has gone from arguing with me to taking full credit for that—he says that it was his idea all along. He was listening to us in those debates, arguing with us and then going away and putting pressure on the Prime Minister to ensure that we got a universal service obligation.

[Nia Griffith (Llanelli) (Lab)]

Does my hon. Friend agree that the highest form of flattery is imitation? If he can convince the Minister that it really was the Minister’s idea, it is far more likely to happen.

--- Later in debate ---

[Albert Owen]

I am not going to take credit for it, otherwise I would be as guilty as the Minister of saying that I influence things on my own. It was the idea of the shadow Minister, my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah), and it was in our 2015 manifesto, that we would have a universal service obligation. The Government said it was a silly idea and that they would concentrate on getting even faster service in some areas and then other areas could catch up later, but I am pleased to say that we are now at the same place. It is very good that we are, but I want to ask some questions about that.

The Minister made a speech and quite rightly stuck to his words that we would have a Bill in June or July. He is as good as his word. A draft Bill has come out, and we have had a consultation. It talks about 10 megabits per second, which he rubbished earlier as being too slow. That was what the consultation said, but he was not encouraging that; he wanted twice, three times or four times that. How is that going to be delivered in Wales? What kind of roll-out programme does he envisage? It is true we have not had the Bill yet and have not debated it at different levels, but I would like to know.

For 95% of Wales, the Welsh Government are rolling coverage out in a contractual arrangement with BT, which seems to be working, albeit not as fast as we want it to. It is patchy in England, with different levels of roll-out and take-up in different counties. Is the Minister clear in his mind that there will be the same delivery plan as for the local authorities in England, or will the Welsh Government roll it out? It would be interesting to know that, because my constituents in areas that are now far behind feel that they could catch up.

I again offer the Minister my island constituency to be a pilot for the scheme. We could plug the 5% gap and then roll out that ideal Anglesey model to the rest of the United Kingdom. Hard-to-reach areas, semi-rural, rural and urban areas could be connected up. We could be the pioneers, as we were with comprehensive education, which the Minister will be aware of. The isle of Anglesey was the first county in the whole United Kingdom to have comprehensive education, and I would like to see it as the pioneer of the digital economy with a universal service obligation across the island.

I make that serious point because I want to work with the Government and the Minister to ensure the Bill goes through smoothly, that we get the planning issues sorted and that we get the outdated telecommunications stuff up to date, which will be in the regulations of the Bill and the enhanced electronic communications code, so that we have seamless roll-out of a universal service obligation. I am sure the technology is there, and it may be that the minimum is 10 megabits per second and we will have extra capacity on stream very soon.

In pilot schemes in other areas of the United Kingdom, speeds of thousands of megabits are being talked about. We do not want to be that far behind and playing catch-up for the future. I hope the Minister will say how he intends to roll the scheme out and how it is going to be paid for. That is interesting—will the Welsh Government be making a contribution, or will it come from local authorities? We are unclear how that is going to work. Hopefully we will be able to get some European money during the Brexit negotiation period for areas that currently benefit from it. My constituents and industries in rural Wales want those certainties.

There are areas in my constituency that are without bus services, are seeing post office and bank closures and now have slow, almost non-existent broadband. That is not right in the United Kingdom. I am sure the Minister is a one nation Conservative and will want to see all parts of the United Kingdom benefit from this technology. I want that, and I know that colleagues who are here want to see rural areas become first-class areas. That is why I support what the hon. Member for Ceredigion says.

I know the Minister wants to achieve that and wants the notoriety of rolling it out. He has longevity in his job already; I am sure he is going to be the longest-serving Digital Economy Minister of all time. In doing that he will be doing a good service not just to his Government but to the country and the area I represent. We need assurances from the Government that they will work with the Welsh Government, BT Openreach and other providers to ensure we get 21st-century digital communications in rural areas of Wales, which deserve it. I hope the Minister is listening and that when he gets to his feet and congratulates the Wales football team he will be able to give us some answers as well.

--- Later in debate ---

[Mr Vaizey]

No. I encourage them to watch it online. They can watch it online, on their iPads or on ITV Player.

Let me turn to the subject in hand. I have been in this job for six years and it may feel like wading through treacle, but when I hear someone as distinguished as the hon. Member for Ceredigion say those four words, “vast improvement in provision”, it makes those six years of hard labour worth it, because we have made a difference. I will come to some serious points, but I want to say that we have achieved a great deal and I will explain where we are.

I have always made the point that we had targets we wanted to achieve. We never said 100% of people would get superfast broadband under our programme. We said 90% would get it by the end of 2015 and we achieved that with 4 million additional homes and businesses, which will be 5 million by the time the programme effectively ends at the end of 2017. We have already completed 36 of the 44 phase 1 projects and we are well into phase 2, and on track to get to 95% by the end of 2017.

People seem to forget the baseline we started from when the programme was on the way. In Wales, fewer than one in three homes had access to superfast broadband in 2011, yet by the end of phase 2, which finishes this time next year, 96.7% will have been reached. This project alone will have provided access to superfast broadband for almost 750,000 homes in Wales. Half of all homes will have broadband because of this project. The figure is already almost 600,000 homes. The audited figure is 582,300, so we have probably passed 600,000 because we are always three months behind in auditing the figures.

It is worth remembering that in the constituency of the hon. Member for Ceredigion, for example, no superfast broadband was provided commercially—he reminded the House that I had made that point previously. Even though his figures are below the national figures and therefore look poor, it is telling that 55% of homes—20,000—in his constituency that now have access to superfast broadband have it because of this programme. Another 10,000 will be added by the middle of next year, with 85% superfast coverage in 30,000 premises that would not have been covered. Coverage in constituencies of Members across the House ranges from a lowly 79% in that of my hon. Friend the Member for Brecon and Radnorshire (Chris Davies)—luckily he has left the Chamber, so I can mention that figure publicly—up to around 92% in Ynys Môn.

[Albert Owen]

I know that the Minister would not want to mislead the Chamber—he would not be allowed to—but when he says “to homes”, he means to the cabinet. There is a technical difficulty in getting broadband from the cabinet to many homes. The cabinets may have been upgraded to provide a signal to homes, but it may not reach those homes.

[Mr Vaizey]

I know that the hon. Member would not want to mislead the House, and the quotation I hope he would take from what I said was “have access to superfast broadband”. There is a lot of terminology in this debate, but basically, yes, it is called fibre to the cabinet—it goes to the big green box—and sometimes people in homes who think they will have access to superfast broadband do not get it, but it is important to stress that the numbers we use are audited and tested by Broadband Delivery UK. We do not simply say, “Here’s a cabinet and therefore any home in the vicinity is going to get broadband.” We audit the figures and we are well aware that homes may be near a cabinet but do not get access to superfast broadband, because sometimes the circuit from the cabinet is confusing. [Interruption.] I am doing this for the benefit of Hansard, to see how they record it in the Official Report—perhaps it will say, “Minister waves his finger around in an odd way.”

The other good thing is that there is more money to be spent. The hon. Member for Ceredigion asked whether areas are being needlessly subsidised, so not only do I have to contend with colleagues; I have to contend with BT’s competitors, who are always keen to get in the door and tell everyone how useless BT is because they are promoting themselves. They say BT is being needlessly subsidised. We saw that one coming and constructed the contract so that if areas effectively become quasi-commercial because more people than we expected took up broadband, we get money back.

As I am sure hon. Members are aware, we have already gained £130 million and it is important to point out that BT has made that money available now. Under the strict terms of the contract, it could have held back for another seven years. We are expecting around £250 million back when the contracts are completed.

We have had additional money committed from BT and from underspend. We believe that with the existing money we can get to 97% rather than 95% of homes, albeit not by the end of 2017, but probably a little later. The underspend is around £150 million, to add to the gain share, so we are looking at about £400 million coming through. That will make a real difference and should help us to reach 97% of homes by the end of 2020.

Another of the points made—I think by the hon. Member for Ceredigion, although the Opposition spokesperson also talked about competition—was about the monopoly aspect. As we move to phase 2 and the contracts become smaller and a smaller number of premises are in play, we are able to bring in smaller providers—for example, we have got companies such as Gigaclear—who would simply not have had the capacity for the big phase 1 roll-out. As part of our market test pilots, to work out how to get to rural areas as cheaply as possible, companies such as AB Internet in Monmouthshire, for example, have already connected 1,500 premises as part of its pilot. The smaller players are now coming into play, and we are actively engaging with a wider supplier base. In total, five different suppliers from BT now have contracts under phase 2, and we have had approval for our new state aid national broadband scheme, which means we can power forward on phase 2.

Some other points were made. I want to reassure hon. Members that the ERDF funding is secure until the end of 2020. We want to put to bed the idea that somehow the European money will disappear. The hon. Member for Ceredigion said that Wales was left behind or left out. I really want to nail that one down. It is important to stress that no part of the United Kingdom was left behind. As I think was mentioned, the total amount of funding available to Wales was in the region of £220 million, and I talked about 750,000 premises being connected—some in very hard-to-reach areas. I think there was also mention of Wales being ahead of the game, in terms of broadband roll-out, compared with the rest of the country.

I want to turn to the future. We talked about the universal service obligation and we learned an important new fact, which is that that is not Government policy; it is the policy of the hon. Member for Ynys Môn (Albert Owen). And it is not the universal service obligation; USO actually stands for “You’ve got service from Owen.” That is how it will be known from now on. In fact, he is such a genial-looking character that I think we might use him in the adverts when the universal service obligation comes to bear. I hope he will take part in the Second Reading debate on the Digital Economy Bill, because I think my second roll-out of that terrible joke might get a better reception if he is better prepared for it. The universal service obligation is there as a safety net. As I said, I think we are going to get very far with the roll-out, but just to give the hon. Gentleman and, indeed, the Opposition an open goal, we have not yet worked out the detail of how the universal service obligation will work. We are working with Ofcom on a range of options, which we will consult on. There is a range of ways in which the USO can be put together.

Of course, the hon. Member for Berwickshire, Roxburgh and Selkirk, who knows his onions when it comes to this subject, made a point that really only the aficionados would have picked up on, which is about how flexible it is possible to be with a USO. As he rightly notes, to have simply a demand-led USO for one individual premise, with a cost cap if it reached over a certain amount, would be potentially a very inefficient way of delivering broadband. We have to be more thoughtful and flexible about how we can deliver broadband to the lowest area.

The hon. Gentleman also talked about whether leaving the European Union might change our potential to increase the speed, but although we have left the European Union, we cannot change the laws of physics. The reason we have gone for 10 megabits is that it is the most realistic speed that we can get in a cost-effective way to the most hard-to-reach areas, but of course satellite connections, for example, could exceed that. Obviously we do not want to write the speed into the Bill, because we want to be flexible to ensure that the USO keeps pace in the future as average broadband speeds increase.

We are also bringing in the electronic communications code. I heard what the hon. Member for Llanelli (Nia Griffith) said about whether it should cover wholesale providers. We have rejected that because the wholesale providers are really on a par with the communication providers, with the mobile network operators, and we think it would be quite wrong to give the mobile network operators a commercial advantage over the wholesale providers that have built a business based on supplying the marketplace. We want the electronic communications code to be—a bit like the USO—a fall-back position whereby, in relation to an individual landlord who is not in the telecoms business but is providing land either for a wayleave or a mobile mast, there is a forum and a tribunal where any dispute can be worked out and worked out quickly. We want to bring the roll-out of broadband infrastructure into line with the roll-out of all other kinds of infrastructure, such as electricity, to try to bring down the costs.

I will make a serious point here. This may well prove to be controversial with some landowners, but we have dealt with a lot of the stakeholder groups in the landowning community, who are realistic and know that you can’t have your cake and eat it. People cannot charge relatively high rents and at the same time complain about rural coverage. I hope that hon. Members will see the bigger picture and support these important changes, because, as the hon. Member for Llanelli said, we have taken a pretty tortuous route to get here.

Those are the two main changes that will come forward in the Digital Economy Bill. Going back to where we are on broadband roll-out, I have been looking at some interesting international comparisons. For example, if someone says that France has 25% coverage for fibre to the premises, people think, “Well, that’s terrible; we’ve been left behind because we only have 2% coverage for fibre to the premises,” but what we should be looking at is the outcome. Then we discover that cable, fibre to the cabinet and fibre to the premises are all in effect in the same geographic areas in France, so actually about 75% of the country does not have access to superfast broadband, whereas 90% of the UK does have access to it.

In fact, we have been very British about this. We have been incremental in how we have rolled out technology; and now, as we come to the end of phase 1 and phase 2, we are about to introduce G.fast, for example. Virgin Media, as hon. Members know, is investing £3 billion or £4 billion for 4 million more homes. We are starting to bring forward what one could call the ultrafast speeds just at the point when the public are ready, as consumers and businesses, to invest in them.

Again, we need to look at the outcomes. I was struck by another figure: how much data do people use in different countries? The average amount of data used in the UK is twice as much as the French use. In fact, the amount of data used by UK consumers has doubled in the last year while prices have remained the same, so arguably data for the consumer—the stuff we watch on the telly or the documents that we download—have halved in price. The UK consumer is actually getting a very good deal.

Obviously I do not want to underestimate the concerns of hon. Members, who have spoken very knowledgeably in the debate. As they rightly point out, broadband is a very big issue. It is a major issue in the rural MP’s postbag, and every MP who has spoken has shown their extensive knowledge not just of the situation in their own constituency, but of the situation with national broadband roll-out. We are coming through to the end of this phase and people are now beginning to see the tangible benefits of the programme, but of course there is more to do.

[Albert Owen]

I will not quote the Minister directly, but he said that he has not thought through how the universal service obligation will work—he has not worked out the details—but is he looking at geographical areas? If we have not spots of 1% or 2%, it is easier to concentrate on that than to have a hit and miss across the country. That is the first point. Secondly, when will we see the consultation, and how will Members of Parliament be able to feed into that?

[Mr Vaizey]

We have already consulted once overall about this, but we will consult during the passage of the Bill or shortly after it is passed, because we want to pass the principle into law. The hon. Gentleman is right: there are a number of ways of looking at this. We could have, for example, regional providers. If we wanted a USO in Ynys Môn, we might have two or three local providers rather than simply having one or two or three national USO providers. To pick up again on the point made by the hon. Member for Berwickshire, Roxburgh and Selkirk, we may want communities themselves to get a USO, rather than an individual. But as I said, I think the corner has been turned in terms of rural broadband roll-out. We are now looking forward to the publication of our digital strategy and the passage of the Digital Economy Bill, which will set out our plans to help the last 5%, but also be more ambitious for the whole country in terms of achieving a gigabit Britain.